Arla will raise farmer climate payments by a third
Arla Foods has approved a revised version of its FarmAhead Incentive scheme, with the first payments under the new model due to take effect on 1 January 2027. The programme ties part of farmers’ milk payments to environmental measures carried out on their farms.
Under the changes, each incentive point will be worth 0.04 euro cents per kilogramme of milk, up from 0.03 euro cents. The number of points that farmers can earn will rise by more than 30%, from 84 to 111. The scheme will remain within its existing structure, under which Arla can redistribute up to three euro cents per kilogramme of milk through climate payments.
Six additional areas will qualify for rewards: forage, manure treatment, biofuels, low-carbon fertiliser, methane reduction among grazing cows and breeding. Arla will also alter the scoring of existing measures, including feed efficiency, fertiliser use, protein efficiency and grazing.
Arla has committed up to €550m a year to reward emissions-reduction efforts under the sustainability programme. The cooperative reports that emissions from its raw milk production have fallen by 1.2m tonnes of CO2 equivalent in absolute terms since 2020.
Farmers participating in the scheme have raised their average incentive scores by six points since its launch in 2023. Arla says it has observed a correlation between higher scores and lower emissions on farms. The company said the revised system would give farmers who had reached the maximum score in some parts of the current scheme additional ways to earn payments.
Hanne Søndergaard, Arla’s executive vice-president for agriculture, sustainability and communication, said the programme connected on-farm climate measures directly with the price paid for milk. She described the expansion as the scheme’s largest step forward since its introduction and said it would provide more opportunities for farmers to act and receive a higher reward per point.
The changes also apply to Arla’s work with retail and foodservice customers. Through its FarmAhead Customer Partnerships, the cooperative provides businesses with farm-level carbon-footprint data and opportunities to support emissions reductions in their supply chains. Arla chairman Jan Toft Nørgaard said the revised model would strengthen the connection between farm-level action and the reductions sought by customers.
